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 The Wall Street firm is once again top dog in the global M&A
rankings, having advised on transactions worth close to $1.7
trillion this year, more than the annual economic output of
Australia, including Friday's $130 billion tie-up between U.S.
chemical giants DuPont <DD.N> and Dow Chemical Co <DOW.N>.
Goldman's No 1 status comes despite the bank having lost several
veteran bankers this year, including Gordon Dyal, its former M&A
chief and Jack Levy, one of four global co-chairmen of M&A, and
reflects the enduring success of its partnership model, 15 years
after the company went public.
Becoming a partner at Goldman Sachs is still one of the most coveted
promotions on Wall Street, and those who make the cut represent a
powerful network of well-connected dealmakers.
The partnership, along with the bank's commitment to remaining a
full-service investment bank despite post-crisis rules that make it
more difficult to trade, have given it an edge over rivals such as
Morgan Stanley <MS.N>, which has a strong emphasis on wealth
management.
"Goldman is still run as a partnership, and delivers the entire
firm," said Brad Hintz, a former Lehman Brothers Holdings Inc chief
financial officer and financial analyst who is now a business
professor at the NYU Stern School of Business.
The 146-year-old investment bank has ranked No. 1 in the global M&A
league tables every year since 1997, with the exception of 2009 and
2010, when it ranked No. 2 behind Morgan Stanley, according to
Thomson Reuters data.
This year, the bank advised on all the mega deals in
pharmaceuticals, energy, beverages and now chemicals, where it is
set to split $80 million to $100 million in DuPont advisory fees
with Evercore Partners Inc <EVR.N>.
Trailing Goldman Sachs in the global M&A league tables this year are
Morgan Stanley, JPMorgan Chase & Co <JPM.N>, Bank of America Corp
<BAC.N> and Citigroup Inc <C.N>.
NAVIGATING CONFLICTS
Goldman's ubiquitous role in finance prompted Rolling Stone magazine
to famously declare in 2010 that the bank was "a great vampire squid
wrapped around the face of humanity."
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Its corporate clients, however, are generally happy to let it
navigate potential conflicts of interest.
In the case of DuPont, for example, Goldman has also been advising
rival Syngenta AG <SYNN.VX> in its defense against a bid by Monsanto
Co <MON.N>.
"Over time, companies have become more sophisticated so banks really
need to differentiate themselves more," said Bob Hurst, a partner at
private equity firm Crestview Partners who served as vice chairman
of Goldman until June 2004 and head of its investment banking
division from 1990 to 1999.
Goldman has done that.
"It has great coverage, is very relationship oriented on the long
term and has great execution," Hurst said.
The bank's prestige and partnership culture is enough to retain many
bankers even at the prospect of higher pay at rivals or Silicon
Valley startups.
Among its peers, Goldman has consistently had a lower compensation
to net revenue ratio than arch rival Morgan Stanley.
"When you are having beer with a Goldman partner, and you roll your
eyes when he waxes lyrically about the partnership, you have to
remember that this is key, you are expected to drop everything as a
Goldman employee when there is a deal on deck," said Hintz.
(Editing by Carmel Crimmins and Andrew Hay)
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